Life as a professional athlete is very different from life as a corporate employee, particularly financially. As an athlete, you get your money on a reverse trajectory from the norm. A draft or signing bonus would be more than enough to constitute the ordinary person’s retirement fund, mortgages, and future childrens’ college funds. However, without careful consideration, that money can be, and often is, gone before they know it, leading to a life of financial ruin and regret.

A Sports Illustrated statistic states that a staggering 78% of all National Football League (NFL) and 60% of all National Basketball Association (NBA) players will declare bankruptcy within 1 and 5 years of retirement, respectively. The NFL is at the forefront of this growing dilemma due to their incomparably low average career lengths. In the three years or less than the average pro career lasts, NFL players make an average of $2 million per year. Athlete Essentials, a wealth management firm that caters to athletes, acknowledges that most NFL draftees are too young and immature to acquire such large amounts of money, as well as they being unequipped to manage or save that money to last. These young athletes, who often come from nothing, suddenly enter a world in which they have just been handed more fame and money than they ever could have imagined. Many tend to fall into a lavish lifestyle characterized by million-dollar cars, mansions, parties, and more. But by the third or fourth year of their careers, many players begin to struggle to live up to their lifestyle’s lavish standards as their signing bonus begins to dwindle. Before long, many athletes have begun living well beyond their means and are desperate for another paycheck. 

Furthermore, athletes tend to overproject their own levels of success, which can quickly lead to financial ruin. If a talented athlete is expecting a second multi-million dollar contract to be waiting around the corner, there is a fairly decent probability that they are going to squander most of their first deal. This can be exponentially more detrimental when an athlete gets injured. With the way the NFL contracts are structured, a large percentage of athletes’ salaries are non-guaranteed, meaning that if a player has a devastating career-ending injury, there is very little that can be done. These players, expecting to make millions of more dollars over the course of their careers, find themselves with very few options and oftentimes large amounts of debt. And don’t forget, only about 50% of players in the NFL have their college degrees, while the other 50% might struggle to find a future job somewhere else. While you might see established NFL stars such as Tom Brady walk in wearing a $12,000 suit and pricier watch, it is starting to become evident that athletes like him represent the minority, not the majority of the leagues. 

The lack of financial guidance that the NFL fosters is almost entirely liable for this situation. There is very little systemic support offered within the NFL offices and very little financial mentorship offered by staff or even players. This poor financial decision-making is often passed on from generation to generation, furthering this endless cycle. 

However, the NFL has begun implementing programs and guidelines in order to educate and assist all of the athletes that enter the league. The NFL has begun encouraging young NFL players to budget their initial paychecks until they are sure they will have steady income down the line. Additionally, the NFL is urging all athletes to hire a financial advisor to help manage spending habits and maximize their investment portfolios. NFL safety Glover Quinn, recently decided to store away 70% of his post-tax income with the intention of being able to live comfortably and support his family through retirement. This is the type of financial planning that the NFL is encouraging and believes will save the future of countless players. The NFL doesn’t want these young athletes to ignore the urge to splurge, but they want them to do so in a controlled, advised manner. While these players might enjoy competing with each others’ extravagant lifestyles and purchases, it isn’t sustainable and would be disapproved of by any reasonable financial advisor. 

While the NFL is beginning to incite change on the professional level, the National Collegiate Athletic Association (NCAA) has to be more prepared than ever to do the same. With the recent Name, Image, Likeness Laws that passed across the NCAA, which allows for student compensation, younger athletes than ever will be coming into very large amounts of money. These college students have been given a platform, and depending on the school and popularity of the sport, have the potential to earn millions of dollars in income ever before playing a professional second of sports. These athletes are even younger and have less experience managing money than professionals, but the NCAA and its new initiatives are on it. 

In a recent survey published in the Journal of Athlete Development and Experience, every athlete that participated responded that they would benefit from learning financial literacy and education. Over 60% of the athletes hadn’t received any source of financial education in high school and only 9% had since met with a financial advisor. It is also said that very few students knew about the NCAA’s existing financial literacy instructional videos, however, they are in the process of getting those videos more attractive. Additionally, the NCAA is working on making financial training available through videos, tips via text message, workshops just for student-athletes, meetings with a peer counselor, book recommendations, mandatory classes, and seminars, and even through an app on your phone. Corporate partners are very enthusiastic and willing to come to talk with athletes about budgeting, establishing credit, and planning financially for their future, and it is proving to be a necessary step for all young athletes. 

While thousands of athletes have been forced to declare bankruptcy, the major professional and college sports associations are working tirelessly to prevent this in the future. These athletes are handling significant amounts of money at increasingly young ages, and it is incredibly important that they are responsible for it. With the help of financial literacy lessons and advisors, hopefully, the financial state of retired/injured athletes will begin to improve. This is a very serious issue within the industry, and the governing bodies like the NFL and NCAA are finally starting to treat it as so.